I talked to an attorney yesterday that specializes in real estate but it wasn't necessarily about the closing it was about a potential lawsuit before or after closing. he has a $2,500 retaining fee and charges about $280 an hour for that service. are there other attorneys that charge less for standard closing and provide advice?

It is possible that the escrow company would hold the funds at closing. The lender would have to release all the funds by closing. But, the builder does not have to agree to close without the full payment being made. Even if the builder agreed to it, the lender would still need to approve it. You probably need to make a risk/reward decision based on the extra cost to extend financing versus the risk you feel the builder may not complete their tasks.

We closed on our new build house with an outstanding 'punch list' of items from the builder. Granted, it was nothing super major, but we have a lot of friends who have built and done the same. Closing with the builder and closing with the lender are two separate items. I would not close with the lender if I had a huge punch list or a really expensive item yet to be completed. The caveat to that is something like flatwork (concrete) where it's a big expense and might not work for timing. Example - I'm in Wisconsin and we closed with the builder late November. It was too late to pour the driveway before winter hit, so the builder provided a guaranteed number it would cost to pour the driveway, the lender escrow'd that money, and we'll complete it in the spring. We closed with the lender in December, with the money in escrow. Our mortgage payment doesn't change, because we know what the total loan amount is (since the driveway $ is in escrow).

Well I talked to the lender a bit today. For whatever reason, our builder and lender talk... a lot. She stated that the builder wasn't sure if he was going to sign the draw paperwork because he feels like we are going to owe him money... $30,000 according to him which is...no matter how you calculate it...not even close to possible. I'm talking with the lawyer tomorrow, but our concern now is that this will be tied up until we go to court. My documentation on the entire build is fantastic. However, the lender also said that now that the certificate of occupancy has been issued we are now responsible to pay interest instead of the builder?? How is that possible? We have a broken window, missing lights, lights that don't work, lights that pop breakers, horrible paint, and a laundry list of other things tat need to be fixed yet we have a certificate of occupancy, are calling the house good to go and the interest is now my responsibility?

Hmmm. Good luck.

Marisha-Is the land in your name? If the builder still owns the lot, there would be no reason for you to pay interest in the construction loan?

The land is in our name. We rolled it into the loan for construction. However, a VA loan the builder is supposed to pay the interest. How can we just declare the house done and have us pay interest for one? I mean we have switches that trip breakers and a house that nobody would buy without thing being fixed. I have my own home inspector going over on Tuesday, but I fear that no matter what I have documented the case is going to be "suck it up, accept it the way it is or else".

Ours says that substantial completion is at which time the certificate of occupancy is provided. I have no idea how we can get a certificate of occupancy with lights that don't work, lights that pop breakers, broken window, etc.

"Ours says that substantial completion is at which time the certificate of occupancy is provided. I have no idea how we can get a certificate of occupancy with lights that don't work, lights that pop breakers, broken window, etc."

That's why you need to sit and review with your lawyer. How the builder, bank and you are understanding the verbage is different. You need to understand the legal way that the contract is dechiphered.

Well the lawyer said that out builder is in breach of contract both with the lender contract and my contract with him as far as completion date. Other breaches as well. He did say I would have a good case but to think it over as far as wanting to fight or just take the house. I told him I'd be willing to take the house but that the general contractor was crazy if he thinks that he's owed money. everything I have is documented and I've already looked at some of his invoices he gave me today based on change orders that I never authorized and was never notified it was going to cost that much. for example the stairs we're supposed to be painted at a cost of $600 which I signed. today he gave me an invoice for $1,800 of which I've never heard of never signed and never agreed to. so I guess we'll see where we sit next week when I present to him what the numbers actually are..

Marisha, I'm sorry you're going through this - from talking to a few others whove had bad builds, 'surprise' change orders are a common (tho illegal) thing.

Keep working with your lawyer, and good luck!!!!!

I had a similar situation on a VA loan and we rolled our property into the loan. I am curious if you are in FL. Our mortgage lady and the builder talked a lot, I think they may have been related in some way.

Anyway, with the VA loan the builder IS responsible for the interest and he was 6 months late closing. I think he finally realized that HE was responsible and finally started moving faster and then pushed us to close, at one point his assistant who was sending us the paperwork told us we really needed to sign that day because we would not want to be responsible for any more interest. When I explained to her it was not my problem but theirs and they should recheck the contract then things got really heated. Anyway, we had several people at our house the next several days taking care of the majority of our punch list so we signed. After closing he sent us an email that we owed something like 14K. We called the lender who said we did not owe as per what he signed so we ignored the email.

I think she said all change orders outside the contingency amount are required to go thru the lender and if he failed to do this he would have been at fault.

Your VA lender may also be able to answer all of your questions.

BTW, we went back thru and added everything up and felt we did not owe him at all but that the invoices appeared to be inflated and some of his math was just wrong.

Anyway.. check with your lender directly vs your mortgage broker and you may be able to avoid some of the legal fees.

Good Luck

How were you guys able to use your VA loan for a new construction build? I've been told that I can not because VA loans can only be applied to existing homes. 3 different lenders have told me that I must do a Construction Loan then later refinance to use my VA loan. Can you please let me how you were able to use your VA loan for a new construction build & which lender you used to assist you?

Thanks so much -

Powell-You can do a construction VA loan. You may also see about having a builder finance the construction process themselves.

The problem you are running into is that the VA has its own set of rules/requirements...as does each bank. So a bank can make stronger requirements. Many banks who do VA loans do not want to take on the risk of a construction loan with no down payment. So while the VA will back the loan, it does not meet the individual banks’ guidelines. Does this make sense?

B Carey - Yes, that makes sense. Thank you.

I am willing to put money down. Maybe I am not asking for the right type of loan at the bank. I am asking for a VA new construction loan. Is that the correct term? Also do I need to indicate that I'd like a VA new construction loan w/ X amount as my down payment? The leaders I spoke to never asked about any money down, They just said no - it can't be done, as if there was no such thing.

We are building a custom home on our land and will be using the va program for the final mortgage. Like BCarey said, you need to find a builder that finances their own construction. When the construction is finished you will apply for a va mortgage.

To locate builders that used their own money to build call a local mortgage broker. I received a long list of builders from them.

Understood. Thanks